TMI Blog2001 (9) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment need to be worked out on the basis of the cost of construction incurred by the assessee. But the Assessing Officer found that the completed portion of the building was let out by the assessee and the assessee had disclosed the receipt of rent for the shop rooms at Rs. 38,794. In addition to the shop rooms the assessee had also let out a hall in the building complex for a sum of Rs. 10,000 per annum. Therefore, the Assessing Officer held the view that the let out portion of the building had to be taken as completed and the valuation of the property need to be made on the basis of rent capitalisation method. For that purpose the Assessing Officer adopted the rental value of the shop rooms at Rs. 38,794 per month as disclosed by the assessee and adopted Rs. 1,000 per month as the rent relating to the hall let out by the assessee. Altogether the monthly rent was worked out to Rs. 39,794 and on that basis adopting a multiplier of 12.5 times, the market value of the shopping complex was worked out to Rs. 46,23,275. 3. The detailed computation of valuation is reproduced from the assessment order for an easy understanding of the issue: "The assessee is the owner of a multi- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the building was not yet complete and therefore only the investment as on the relevant valuation date can be included for wealth-tax purposes. This contention was accepted by the CWT (Appeals), in view of the decision of the Madras High Court in the case of CWT v. S. Venugopala Konar [1977] 109 ITR 52. Accordingly, the CWT (Appeals) directed the Assessing Officer to adopt a sum of Rs. 25,32,400 as the investment in the building as on the relevant valuation date and adopt that amount for the purpose of valuation. It is against the above decision that the Revenue has come in second appeal before the Tribunal. 5. The Revenue has also raised alternative grounds on the quantum of the investment value determined by the CWT (Appeals). The detailed grounds are as below: 1. The ld. CWT(A) erred in directing the Assessing Officer to adopt Rs. 25,32,400 as investment in the building as against Rs. 46,23,275 adopted as the value of the property on rent capitalisation method. 2. The ld. CWT(A) erred in coming to a presumption that the construction of the building was not completed as on the relevant valuation date i.e., 31-3-1989. 3. The ld. CWT(A) overlooked the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of the investment made by the assessee as on the valuation date is not correct and that may be set aside and remitted to the Assessing Officer for working out the correct figure after taking into consideration the investments made by the assessee subsequent to the closure of his accounts for the previous year relevant to the assessment year 1989-90. 7. We also heard Shri K.M.V. Pandalai, the learned counsel appearing for the assessee. He submitted that there is no dispute on the fact that the construction of the shopping complex building was not complete on the valuation date. This fact has been acknowledged by the Assessing Officer in the assessment order itself. In the case of an incomplete building, the method of valuation is the investment method and not the method adopted by the Assessing Officer said to be the rent capitalisation method. He submitted that this proposition is supported by the decision of the Madras High Court in S. Venugopala Konar's case. He stated that in the said decision, the Hon'ble Court has held that in respect of any incomplete construction, normally there cannot be any market value as on successive valuation dates on the basis of the progress in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee was earning rental income. In such circumstances, the right course of action to be followed by the Assessing Officer is that he has to bifurcate the nature of the building into two. That portion of the building, of which the construction has been completed and has been let out has to be treated as a separate unit, and that part of the building, which is not yet complete has to be treated as another unit. As far as the first unit is concerned, the Assessing Officer has to value the property on rent capitalisation method. As far as the second part is concerned, it has to be valued on investment method, as held by the Madras High Court in S. Venugopala Konar's case. In the present case, the Assessing Officer has valued the completed portion of the building on rent capitalisation method. He is justified in doing so. If we accept the argument of the assessee, we will be missing the woods for trees. The assessee is maintaining a contention that the incomplete condition of a part of his building should act as a fetter in applying the law in valuing the let out part of his building. We are not able to accept this contention. This will defeat the very purpose of the law and r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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